Owner Rita Crundwell ‘was kind of like Madonna’ in her field…

Ask anybody in the quarter horse business. They’ll tell you. Rita Crundwell was one of the greatest owners anybody had heard of.

The 59-year-old woman from Dixon, Ill., had hundreds of horses. She’d fielded dozens of world champions. When friends of her longtime veterinarian, Tim Strathman, introduced him to other horse folks, they’d just say: He’s Rita’s.

“She was kind of like Madonna; she only had one name,” Strathman said. “Everyone involved in the horse industry knew who Rita was.”

Yet when the American Quarter Horse Assn. finished its annual World Show in Oklahoma City two weeks ago — the biggest stage in a competitive industry, one that her horses had dominated for eight years straight — Rita Crundwell and her lavish horse trailers were nowhere to be found.

Crundwell was in a federal courthouse in Rockford, Ill., pleading guilty to stealing more than $53 million from her small town. She’d executed one of the greatest swindles in the history of modern municipal government, far surpassing the $5.5 million prosecutors suspect eight city leaders of stealing from Bell, Calif.; her quarter horse empire dwarfed the lifestyle led by former Bell city manager Robert Rizzo, whose stable of thoroughbreds was reported to be in the dozens.

Crundwell ascended in horse breeding while working an $80,000-a-year job managing Dixon’s annual budget, which usually ran less than $10 million.

Before Crundwell was caught, Dixon city employees had gone years without getting raises. Streets were going unpaved. Old equipment wasn’t getting replaced. At an October 2011 City Council meeting, officials fretted over a “fiscal crisis” that prevented them from hiring part-time employees and had them mulling cuts to the city’s 76-year-old municipal wind band, which cost about $65,000 a year.

Considering Crundwell’s opulence at home juxtaposed with her day job handling the finances for a town of about 16,000, Strathman said he and others in the quarter horse crowd “used to joke that one of these days Dixon was going to open up the checkbook and it’s going to be empty. But we were like, ‘that can’t be right, because they don’t have that much money.'”

***

Ask anybody who worked around Rita Crundwell or competed against her. They’ll tell you.

Sweet as pie, they’d say. You couldn’t find a nicer person on the face of the planet to talk to. She was the nicest person in the world to work for. She’d get out there and work the stalls just like everybody else. If you needed something, she’d give it to you; if you thought something needed to be done, she did it.

At work she dressed professionally but not ostentatiously, and drove a black Cadillac that had her initials — RAC — on her license plate. People in Dixon knew Crundwell had at least a little money, and thought she made it from the horse business. People in the horse business knew Crundwell had to be wealthy and — aware of the punishing economics of horse breeding — thought she had to have made her money somewhere else.

“One story that I’d heard was that someone in her family was in the satellite business — something to do with NASA, the space satellite program — and they just had unlimited funds coming in from that,” said Kevin McCary of Mansfield, Texas, who started competing three years ago, when Crundwell was already a titan. “And then there was another story that her family was in the communications business and that they owned every cellphone tower in Illinois.”

The reality was that she was raised from humble roots in Dixon and had started working for the city part time as a high school student. Crundwell quickly rose to become city comptroller, a position she held for almost 30 years.

“She knew where everything was at,” said James Burke, Dixon’s mayor since 1999. “I could ask her for some contracts with the utility company or something several years ago, and she would wheel around and pull something right out of her desk.” He added, as if musing to himself, “I guess that was her strong point and her weak point.”

When Crundwell went on vacation in October 2011, a co-worker filling in for her found an account with $267,000 in withdrawals for the month of September, none of which appeared to be for city business. Burke told the FBI, and the FBI quietly watched for half a year as Crundwell took at least $3.2 million from the city, according to prosecutors. Crundwell was smiling on April 17 when Burke called her into his office, where three FBI agents were waiting.

“She comes waltzing in here, ‘Good morning,’ cheerful as could be, and I said, ‘These three gentlemen here would like to ask you some questions,'” Burke said. It would be the last time Burke spoke to her; everything was now up to the FBI’s lead agent. “I was looking at the expression on her face and it never changed. He said, ‘I’d like to ask some questions,’ and she said, ‘Sure.'”

***

Ask anybody in the quarter horse business who heard about Rita Crundwell’s arrest. They’ll tell you. Her fall was almost as spectacular as her rise.

After the feds seized her property, Dixon taxpayers and horse competitors alike gaped at the court documents enumerating her misbegotten wealth.

A 1967 Corvette Roadster. A Lexus, a Hummer, a Thunderbird. Late-model trucks. Late-model tractors. A 20-foot pleasure boat. A $259,000 horse trailer. A $2.1-million motor home. A Florida home. Hundreds of thousands of dollars in jewelry and fur coats. Leather and wooden furniture befitting a queen of the rural Midwest, and all the champion trophies to go with it.

Crundwell is free on a recognizance bond, awaiting her sentencing early next year.

The horse people won’t likely forget the weekend that Rita Crundwell lost her champion horses. Many of them still name the dates without prompting: Sept. 23 and 24, when the U.S. Marshals held an auction for hundreds of horses at Crundwell’s ranch to help raise money for the city.

“If you’re into quarter horses, you knew about that Crundwell sale — there was no way around it,” said Doug Tallent of Vale, N.C.

Thousands came, some from overseas, with reports of every hotel booked for miles around and special food and shuttle service for the visitors. Tallent bought 19 of Crundwell’s horses. The biggest bid came for multiple world champion Good I Will Be, who brought $775,000 from a Canadian breeder.

The names of her stallions may stripe the pedigrees of future champions for years, but Crundwell’s own name was replaced at the World Show by the new champion: Kevin McCary.

Ask anybody if there was anything different about this year’s championship. “Yeah,” said David Williams, McCary’s showing partner, who erupted into a laugh. “We won nine trophies!”

“What we have in this case is an object lesson in how not to manage public funds..”

A former comptroller for a small town in Illinois pleaded guilty to embezzling $53 million from city accounts to feed a lavish lifestyle that included a nationally known horse-breeding operation.

Rita Crundwell, 59, pleaded guilty Wednesday to wire fraud in federal court for siphoning off taxpayer dollars to her secret bank accounts while comptroller of Dixon, Ill., the boyhood home of former President Ronald Reagan.

Crundwell spent most of the stolen cash on extravagant items such as a $2 million custom RV, a Florida vacation home and her most prized possession – a world-class horse breeding farm.

“If nothing else, what we have in this case is an object lesson in how not to manage public funds,” Gary Shapiro, the acting U.S. Attorney for northern Illinois, said. “This is a crime that should never have been allowed to occur.”

All of Crundwell’s items are up for auction by the U.S. Marshals, including 400 horses. Only $7 million has been recovered so far.

“Since the day of her arrest, Rita has worked with the government to accomplish the sale of her assets, including her beloved horses — all with the goal of helping to recoup the losses for the city of Dixon,” Public Defender Paul Gaziano said.

The question many residents of Dixon are now asking is how did she get away with the scam for so long? Dixon Mayor James Burke said Crundwell was the only person who controlled the city’s finances and funneled public money to her secret, private accounts.

“There were no red flags that we were able to, or did notice here at city hall,” Burke said.

Authorities say Crundwell was eventually taken down after going on vacation in October 2011, and her replacement at work called the bank to clear up some confusing paper work and stumbled upon her secret back account. Crundwell was arrested in April by the FBI.

Prosecutors say she began stealing money in 1990 to support her extravagant way of life. As the town’s comptroller since the early 1980s, Crundwell earned an annual salary of $80,000, according to the complaint filed in April in the Northern District Court of Illinois.

“There are all kinds of things that I wish I would have done differently,” Mayor Burke said.

Many residents in the working-class town are in shock that she was able to get away with it for so long.

“Nobody really had any idea that she was doing what she did. Now that we look back on it, watching all the stuff grow out there at the ranch and her home and her lifestyle and everything else, it’s funny we didn’t put two and two together,” Dixon resident Stan Wolzen said.

Crundwell is facing up to 20 years in prison and will be back in court on Feb. 14.

Horses, tack, trailers, and other equipment belonging to indicted Quarter Horse breeder Rita Crundwell brought more than $4 million during a two-day live auction in Dixon, Ill.

Earlier this year, a federal grand jury in Illinois indicted Crundwell for allegedly misappropriating $53 million in funds from the town of Dixon, Ill., where she had served as comptroller since the 1980s. Federal law enforcement agents later arrested Crundwell and charged her with one count of wire fraud, to which Crundwell later pleaded not guilty. If convicted, Crundwell could face maximum penalties of up to 20 years in prison and a $250,000 fine, or an alternate fine totaling twice the cost of the loss or twice the gain, whichever is greater.

Following the arrest, a federal court judge placed more than 400 horses connected to the case in the custody of the U.S. Marshals Service. Professional Auction Services Inc. was later hired to carry out the sale of the horses and related equipment at auction. Earlier this month an online auction of 80 Crundwell horses realized $1.6 million.

On Sept. 23 and 24, another 400 horses along tack, trailers, and other equipment were sold during a live auction at Crundwell’s farm in Dixon. U.S. Marshal’s Service Spokesperson Lynzey Donahue said that proceeds from the sale of the horses totaled $3,797,300. In addition, frozen semen proceeds totaled $98,500, and tack and equipment sales totaled $892,945. Meanwhile, Crundwell’s luxury motor brought $800,000 in an online auction that ended on Sept. 25.

Donahue said that net proceeds from the sales will be placed in escrow while Crundwell’s case is pending. If Crundwell is convicted the proceeds from the sales will be given to the City of Dixon, Ill., as restitution, she said.

Dixon Mayor Jim Burke said that the $4.7 million derived from the live auction represents about 5% of the revenue the city lost though Crundwell’s alleged misappropriation. Just how much of the auction proceeds Dixon will realize is uncertain.

“The people of Dixon expected that there would be some restitution,” Burke said. “The care of the horses have been costing (the federal government) about $200,000 a month, so we don’t know what the City will get on the horse sales.”

As the Crundwell case continues, the auction of other assets is pending, Burke said. In the meantime, morale among Dixon residents is high, he said.

“It’s a complicated case, but most people who care about the community are looking ahead, and not at the past,” said Burke.

…former Dixon comptroller stole more than $53 million during her 20-year career for the city

Rita Crundwell, former comptroller for Dixon leaves federal court in Rockford on Monday, May 7, 2012, after pleading not guilty at her arraignment to charges that accuse her of stealing tens of millions of dollars from the community. Prosecutors contend that Crundwell had been transferring Dixon’s money to a secret account since at least1990 and using the money to create one of the nation’s leading horse-breeding operations and buy luxury homes, cars and jewelry.

ROCKFORD, IL — More than 400 horses belonging to Rita Crundwell will be sold by Sept. 30 as part of a civil forfeiture case stemming from criminal allegations that the former Dixon comptroller stole more than $53 million during her 20-year career for the city.

The proceeds of the sale will be used to pay for the horses’ upkeep since Crundwell’s April 17 arrest. Other parties, including those with liens on the horses, are filing claims with the court to recover their funds as well.

United States Attorneys announced the sale timeline today during a status hearing with Magistrate Judge P. Michael Mahoney. An exact date and place for the sale won’t be known until the U.S. Marshals Service awards a contract to an auction service.

Also at the hearing, Crundwell’s defense attorneys asked for more time to review the now-18,000 pages of evidence in the case; Mahoney granted the request and set the next status hearing for 11 a.m. Aug. 29.

…they plan to have the horses sold and to give the proceeds to Dixon

ROCKFORD, Ill. — The former comptroller of a small northern Illinois city pleaded not guilty Monday to charges alleging she stole more than $53 million of the public’s money to fund a lavish lifestyle and create one of the nation’s foremost horse-breeding operations.

Rita Crundwell and her attorney, Paul Gaziano, refused to comment after leaving the federal courthouse in Rockford, where she pleaded not guilty to a single count of wire fraud. Crundwell, who is free on a recognizance bond, could be sentenced to up to 20 years in prison if convicted.

Prosecutors allege that since 1990, the 58-year-old Crundwell stole more than $53 million from Dixon, where oversaw public finances as the city comptroller since the 1980s, by diverting it to an account she had set up for personal use and misleading city officials.

Authorities say Crundwell bought luxury homes and vehicles, and spent millions on her horse-breeding operation, RC Quarter Horses, LLC, which produced 52 world champions in exhibitions run by the American Quarter Horse Association.

Prosecutors say her scheme unraveled only when a co-worker filling in for Crundwell while she was on an extended vacation stumbled upon the secret bank account.

Her arrest stunned tiny Dixon, a small city along a picturesque vein of the Mississippi River about a two-hour drive west of Chicago in Illinois farm country. Its 16,000 people are largely lower-middle class, working at factories, grain farms, the local prison and a hospital, among other places.

Prosecutors also have filed a lawsuit seeking 311 registered quarter horses and dozens of foals that are expected to be born this spring. Prosecutors said while announcing the lawsuit that they plan to have the horses sold and to give the proceeds to Dixon, where the late President Ronald Reagan lived as a boy.

Ex-comptroller indicted in theft of city funds over 22 years

The small northwestern Illinois town of Dixon took another body blow Tuesday as federal authorities charged that its longtime comptroller stole nearly double what prosecutors originally alleged.

In formally indicting Rita Crundwell on Tuesday, federal authorities charged that she stole more than a whopping $53 million from city coffers over nearly 22 years, up from the initial estimate of $30 million in just the last six years.

Prosecutors are now moving to force the champion quarter-horse breeder to forfeit bank accounts, her horse farm in Dixon, three residences, a luxury motor home and more than 300 horses — all of which she allegedly bought with stolen city funds.

Crundwell, who had served as Dixon’s comptroller and treasurer since 1983, is charged with stealing the money beginning in December 1990 from a city bank account the current mayor has said he never knew existed. Over the next 21 1/2 years, she allegedly stole more than $53 million — an average of more than $200,000 a month, a staggering sum for a town the size of Dixon, best known as the boyhood home of President Ronald Reagan.

For the first time, authorities alleged that Crundwell concealed all the money going into her own pocket by telling the mayor and City Council that the state was late in its payments to Dixon.

Prosecutors said Tuesday that Crundwell admitted to FBI agents during her arrest last month that she’d used the ill-gotten city money to buy some of her horses and pay for their upkeep.

With more than half of the money stolen in the last six years, the embezzlements grew bolder over time, according to the charges.

“The whole thing is incredible,” Mayor James Burke said Tuesday in a telephone interview. “There’s been five city councils and at least probably three mayors and three finance commissioners in that period of time. … She got by a lot of people.”

Experts have said numerous financial safeguards broke down or simply didn’t exist in the city of just under 16,000. For one, Crundwell had almost complete control over finances, authorities said. She also picked up the city’s mail to keep city officials from learning about the secret bank account she used to funnel herself the money, investigators alleged Tuesday. When she took a vacation, she had a relative handle the chore, they said.

Prosecutors asked for court permission to auction off 311 horses she boarded at her ranch in Dixon, as well as a ranch in Beloit, Wis., and farms around the country, including Texas, Florida and Ohio. Papers filed in court listed all the horses. Atop that court filing, authorities highlighted a horse named Have Faith in Money.

The government said it plans to eventually sell the animals and other seized property in order to return some of the funds Dixon has lost.

“Deputy marshals will not be running around feeding horses,” said Chief Deputy U.S. MarshalJohn O’Malleyin Chicago. “We will have professionals do that.”

Crundwell’s arrest two weeks ago sent shock waves through the horse-breeding industry nationwide. Crundwell was considered the most successful quarter-horse breeder in the country, with her horses taking home top prizes at shows across the nation, said Gene Graves, president of the American Quarter Horse Association.

Many rival breeders fear that selling off hundreds of some of the finest horses in the nation would depress prices, a problem that Graves likened to the mortgage foreclosure crisis.

“You put that many up for auction at one auction, it’s going to be tough,” he said…

“She has a trophy case that you wouldn’t believe”

Rita Crundwell accepting award in '09

DIXON, Ill. — The small-town bookkeeper dazzled friends and co-workers with invitations to her immaculate horse ranch and home, where she displayed trophies hauled back from world championship exhibitions and visitors in cowboy hats arrived to buy some of the best-bred horses in the nation.

“She has a trophy case that you wouldn’t believe — actually a room,” said Stephanie Terranova, who worked with Rita Crundwell for 15 years at city hall and attended her parties and auctions. “You wouldn’t believe the different people that came. We don’t have a lot of that type of thing around here. … Cowboy boots, cowboy hats and southern drawls.”

The gulf between Crundwell’s two worlds was breathtaking, and her colleagues and neighbors never guessed how the two entwined: Crundwell is accused of using her modestly paid town hall job to steal their tax dollars, support an extravagant lifestyle and win national fame as a breeder.

Federal prosecutors say Crundwell, 58, who handled all of the city’s finances, embezzled a staggering $30 million in public funds from Dixon, the boyhood home of the late President Ronald Reagan.

In a criminal complaint, they say they’ve obtained bank records that document each step she took in shifting taxes and other public funds through four city bank accounts before hiding them in a fifth account no one else knew about. Still, they are trying to figure out how she kept the scheme a secret, even from outside auditors, for at least six years. It unraveled only when a co-worker filling in for Crundwell while she was on an extended vacation stumbled upon the secret bank account.

Crundwell had an encyclopedic knowledge of city business down to which drawer contained a particular document, said Mayor James Burke, who recalled feeling uneasy about the city comptroller’s growing wealth.

“There wasn’t anything to hang my hat on,” said Burke, who has known Crundwell since she was a teenager. “Rita, she is a very, very smart person. I mean she is almost brilliant … which I think probably was one of the reasons that a lot of people got bamboozled with her.”

On Monday, the city fired Crundwell, who was arrested by FBI agents April 17 on a charge of wire fraud and later freed on a $4,500 recognizance bond. She could enter a plea at a May 7 status hearing. Her lawyer, federal public defender Paul Gaziano, refused to comment on the case. Phone messages left at numbers listed for Crundwell’s Dixon home and ranch were not returned.

Her arrest stunned Dixon, a small city along a picturesque vein of the Mississippi River about a two-hour drive west of Chicago in Illinois farm country.

“People just don’t understand it, just how $30 million could …,” cafe-bookstore owner Larry Dunphy said, trailing off at the thought of it.

Of the millions Crundwell is accused of funneling into the secret account, only six checks totaling less than $154,000 were ever spent on city business, made out to a sewage fund and a corporate fund, according to Assistant U.S. Attorney Joseph Pedersen.

The rest, prosecutors say, went to her personal and business expenses, including her horse farms in Dixon and just across the Wisconsin state line in Beloit. Agents searching her home, office and farms seized seven trucks and horse trailers, three pickup trucks, a $2.1 million motor home and a Ford Thunderbird convertible.

While Crundwell had other indulgences, court documents indicate most of the stolen money was lavished on her beloved horses. She bought trucks and trailers to haul them around, including a Featherlite Horse Trailer for about $259,000, according to the criminal complaint.

Crundwell grew up in Dixon, playing baseball and surrounded by the outdoors and animals from an early age on her family’s farm. At 17, she started at City Hall in a work program for high school students.

She stayed, serving as treasurer and becoming comptroller in the early 1980s. She oversaw the finance and accounting department and its two clerks, including Terranova, in a modest building in Dixon’s quaint, historic downtown along the fast-flowing Rock River.

“She was wonderful to work with,” said Terranova, a deputy clerk who watched as Crundwell’s breeding business rapidly outgrew a small barn and pasture by her house and expanded to the Meri-J Ranch in Wisconsin and more recently to an immaculate 100-acre ranch on Red Brick Road, a few miles from her Dixon home.

Crundwell is deeply involved in the care of the horses, even braiding their manes and — when the farm was still small enough — running back and forth from City Hall to handle chores herself, Terranova said.

Crundwell’s breeding program has produced 52 world champions in exhibitions run by the American Quarter Horse Association in Amarillo, Texas, the world’s largest equine breed registry and membership organization.

“Where would we be if we had all the money we were supposed to?”

( Phil Velasquez, Chicago Tribune / April 18, 2012 )Dixon city comptroller Rita Crundwell, left, leaves the Federal Building in Rockford Wednesday afternoon with her lawyers after being released.

The chief financial officer of the small northwestern Illinois town of Dixon was ordered released from custody yesterday afternoon, a day after her arrest on a charge she misappropriated about $30 million in city funds.

U.S. Magistrate Judge P. Michael Mahoney agreed to free Rita Crundwell on a handful of conditions, including that she cannot sell or dispose of her horses or real estate and cannot remove funds from two bank accounts.

The Dixon comptroller, who was put on unpaid leave, also must surrender her two guns and cannot travel outside the Northern District of Illinois and Western District of Wisconsin.

Crundwell, dressed in an orange jumpsuit, said little during the brief hearing with the exception of responding, “Yes sir,” when Mahoney asked if she agreed to waive her right to a preliminary hearing.

She is due back in court May 7. She was charged with one count of wire fraud.

After the hearing, Crundwell’s attorney, Paul Gaziano, declined comment, as did about eight family members and friends who attended the hearing in federal court in Rockford.

Assistant U.S. Atty. Joseph Pedersen said the investigation is ongoing and his office would “seek to recover any and all assets we can and return those to the city of Dixon.”

Dixon Mayor James Burke, during a brief press conference at City Hall this morning attended by at least 75 residents and city employees, announced Crundwell was on unpaid leave. The mayor took no questions from reporters.

Crundwell was arrested Tuesday on a single count of wire fraud. Authorities alleged she stole city funds over the last six years to finance an extravagant lifestyle that included spending huge sums on her horse farms in Dixon and Beloit, Wis. as well as jewelry and a luxury motor home.

Burke told the crowd that two independent firms audit the city and have found “no issues of non-compliance.” When the city filed its audits with the state, Burke said a review also came up with “no adverse findings” and the city’s main bank also did not notice anything suspicious.

As for the city not realizing $30 million had disappeared from its coffers over the past six years, he said a multitude of factors played into its financial issues including its tax cap, declining revenue, late payments from the state, rising health care costs and investments in infrastructure.

“These facts … are a plausible reason for the financial problems our community is facing,” he said.
But longtime resident Doug Hoyle, 61, said the staggering losses “gives the impression city officials are grossly negligent and incompetent.”

“It awakened a sleepy little town,” he said.

Resident Ellie Shank, 65, said she can’t help but wonder “where would we be if we had all the money we were supposed to,” citing a closed city pool and the need for road improvements.

Burke said the city will retain its own independent investigator to look into the wrongdoing, but he does not believe any other city employees were involved in the thefts. The council also will appoint a panel to research additional financial controls for the city and will hire a new accounting firm to perform audits.

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